Question

Discuss the impact of the Great Depression on global politics in the 1930s. What was the Great Depression? How did it destabilize the world order? What were the consequences, both in terms of geopolitics, ideologies, and political passions?

Answer 1

• The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939. It began after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors.
• In the early 1920s the Great Depression hit. The chaos caused by the First World War was the main reason for the Great Depression. The USA had lent large amounts of money to other countries to help with their damages from the war. The loans that the USA made helped the countries to recover trade. Many countries tried to protect their industries by putting taxes on imports. In 1930 USA the biggest trading nation in the world also raised their taxes. This made the world trade suffer badly as it made it difficult to sell goods to America.
• World trade was already very difficult so when the Wall Street Crash hit there was a worldwide economic slump. The American stock market was centered on Wall Street in New York. American banks wanted all the money lent out repaid back to them. Banks and factories closed and soon all the countries had loss of imports and exports.
• Germany was affected the most by the Great Depression. Agricultural prices fell. This brought poverty to the countryside. The Wall Street Crash meant the withdrawal of the USA loans. This hit Germany worse than other countries. Unemployment rose to 5.5 million in 1931. Also in 1931 the five major banks crashed in Germany. Because of this many businesses failed and most middle class people lost their savings. The Depression brought Hitler and the Nazis to power.
• The use of tariff increases was not confined to debtor nations. In 1930 Congress approved and, in spite of the appeals of hundreds of economists, President Hoover refused to veto the Hawley-Smoot tariff. The decision to raise duties on U.S. imports was one of narrow self-interest; policy makers failed to understand the need for debtor countries to earn dollars by selling goods to the United States.
• Although Hawley-Smoot invited and received retaliation, it would be a mistake to view this legislation as playing more than a minor role in reducing international trade. Growing depression and contracting income explain the decline in the purchase of internationally traded goods.
• The Great Depression had important consequences in the political sphere. In the United States, economic distress led to the election of the Democrat Franklin D. Roosevelt to the presidency in late 1932.
• Roosevelt introduced a number of major changes in the structure of the American economy, using increased government regulation and massive public-works projects to promote a recovery. But despite this active intervention, mass unemployment and economic stagnation continued, though on a somewhat reduced scale, with about 15 percent of the work force still unemployed in 1939 at the outbreak of World War II. After that, unemployment dropped rapidly as American factories were flooded with orders from overseas for armaments and munitions.